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The major U.S. benchmarks’ already-bullish technical backdrop continues to strengthen ahead of the Federal Reserve’s policy statement, due out Wednesday afternoon.

On a headline basis, the S&P 500 has confirmed its primary uptrend — notching consecutive closes atop the 2,500 mark — amid an increasingly rotational, and bullish-leaning, U.S. sub-sector backdrop.

Before detailing the U.S. markets’ wider view, the S&P 500’s
SPX, +0.18%
hourly chart highlights the past two weeks.

As illustrated, the S&P has sustained a slight break from the range, notching consecutive closes atop the 2,500 mark.

Tactically, near-term support points are followed by the S&P’s first notable floor matching the breakout point, circa 2,480.

Meanwhile, the Dow Jones Industrial Average has extended the September breakout, notching five straight record closes.

In its case, notable support spans from about 22,120 to 22,140 — closely matching the breakout point, illustrated on the daily chart — and is followed by a deeper floor matching the early-September peak, circa 22,040.

Against this backdrop, the Nasdaq Composite continues to press familiar resistance.

The specific area matches the July peak of 6,460, also illustrated on the daily chart below.

The index briefly ventured higher Monday — reaching record territory — before once again closing under the range top. An extended retest remains underway.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has effectively nailed the range top — the July peak of 6,460 — and thus far held tightly to resistance.

The muted selling pressure at well-defined overhead, combined with strength elsewhere, improves the chances of eventual follow-through. On further strength, a near-term target projects to the 6,540 area.

Moving to the Dow, the blue-chip benchmark has extended its break to uncharted territory.

The September rally punctuates a third recent successful test of the 50-day moving average, positioning it to build on the initially steep mid-summer breakout.

Tactically, the breakout point, circa 22,120, pivots to the Dow’s first notable support. Conversely, an intermediate-term target continues to project to the 22,550 area.

Still, an eventual close higher opens the path to a potential retest of its record close (326.41) and absolute record peak (326.88), also established July 25.

Summing up the backdrop

Collectively, the prevailing backdrop is not one-size-fits-all, though the bigger-picture technicals remain bullish.

Though the small- and mid-caps continue to lag behind, the S&P 500 and Dow industrials have staged respectable breakouts, while a Nasdaq Composite breakout attempt remains underway.

Meanwhile, the U.S. sub-sector backdrop registers as increasingly rotational.

For instance, the formerly lagging energy and retail sectors have turned higher, signaling technical trend shifts flagged last week. More immediately, the Financial Select Sector SPDR has come to life, clearing the 50-day moving average ahead of the Federal Reserve’s policy directive, due out Wednesday afternoon.

Against this backdrop, an intermediate-term S&P 500 target continues to project to the 2,550 area, and all trends technically point higher pending sings of a bearish pulse.

Tuesday’s Watch List

The charts below detail names that are technically well positioned. These are radar screen names — sectors or stocks poised to move in the near term. For the original comments on the stocks below, see The Technical Indicator Library.

Drilling down further, the SPDR Gold Trust
GLD, -0.69%
has extended the September pullback ahead of the Federal Reserve’s policy statement.

Still, the shares remain technically well positioned for the longer-term.

Recall that the late-August breakout was directionally steep, resolving a bullish double bottom defined by the May and July lows. Moreover, the rally was fueled by a sustained volume increase, and punctuated by a 52-week high.

Tactically, the ensuing pullback places the shares within view of the breakout point, circa 123.30, and 3.2% under the September peak. This area defines major support, and the first pullback would be expected to draw buyers.

More broadly, the August spike signaled a major trend shift, illustrated on the two-year chart, and the subsequent pullback has thus far inflicted limited technical damage. A violation of the breakout point would be cause to reconsider.

Technically, the group has knifed to 17-year highs, resolving an ascending triangle underpinned by the 50- and 100-day moving averages.

Though near-term extended, and due to consolidate, the steep September spike is longer-term bullish. A pullback toward the breakout point, circa 89, would offer an attractive entry.

More broadly, the group’s intermediate-term target projects from the former range, to the 97 area.

Moving to specific names, Tesla, Inc.
TSLA, -1.40%
is a large-cap name coming to life.

As illustrated, the shares have rallied to the range top, notching a nominal record close, and absolute record peak. The September upturn has been directionally sharp — fueled by a sustained volume increase — and punctuates a successful test of the 100-day moving average. Bullish price action.

Still, Tesla’s breakout attempt remains underway, and the response to the range top, circa 387, across the next several sessions, should be a useful bull-bear gauge.

Tactically, notable support matches the former range top, circa 365, and a breakout attempt is in play barring a violation. The shares are lower early Tuesday, pressured after a negative analyst note.

The ensuing pullback has been flat, underpinned by the top of the gap (142.20), positioning the shares to build on the initial spike. A slightly deeper floor matches the breakout point, circa 140.50, and a posture higher supports a bullish bias.

Mazor Robotics, Ltd.
MZOR, -0.09%
is a mid-cap Israel-based developer of devices designed to support surgical procedures.

Technically, the shares have recently knifed to record territory, rising after the company announced it had reached the next phase of its partnership with Medtronic earlier than expected.

The subsequent flag pattern is underpinned by well-defined support, positioning the shares to extend the breakout. Tactically, the prevailing uptrend is firmly intact barring a violation of the September low (43.00).

Public since May 2015, Baozun, Inc.
BZUN, +1.38%
is a mid-cap Shanghai-based e-commerce name coming to life.

As illustrated, the shares have knifed to record territory, clearing resistance matching the July and August peaks.

Though near-term extended, the nearly straightline strong-volume September rally is longer-term bullish. An eventual pullback toward the breakout point, circa 35.50, would offer an attractive entry.

Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column each market day, click here.

Still well positioned

The table below includes names recently profiled in The Technical Indicator that remain well positioned. For the original comments, see The Technical Indicator Library.

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